Thurloat Blog

GM Re-invention Strategy

Lately, something that has been invading my tweets and really interesting me, has been the news regarding Chrysler and the General Motors (GM) bankruptcies. Keeping tabs on the auto industry is a odd hobby of mine. You’d like me to fill you in on the confusion of it all? SURE!

So from what i’ve gathered, the situation as it stands on The Big Three (Ford, Chrysler and General Motors) is as follows:

• Chrysler is so bankrupt it isn’t even funny. They are selling off all of their semi-profitable brands to other companies and seeking buy-outs from foreign markets.

• GM has also filed bankruptcy, but has put a wonderful Public Relations spin on the whole thing. IIRC the company is now 60% owned by the US government, and i’ve just recently heard that the Canadian Government has decided to invest ~ approximately $10 billion in the “restructuring” of the brand. They’ve decided to focus on only their core market. This means that Chevrolet, Cadillac, Buick and GMC will be the only surviving GM brands, and they’re also looking on cutting down their expansive, self-competitive lineup to under 30 offerings across all brands.

Today, GM released their “Re-Invention” Commercial to explain to the public in “fluffy” words, that they’re going to fire union workers, and do a lot of cost-cutting.

• Ford is on top of their game. No one has heard about Ford lately because they decided to restructure in 2006 before anyone else knew something was going wrong. See, back in 06’ when Ford got their new CEO, he did a massive “re-invention”. They have since brought back the Taurus (mistake to have killed it), are working on a global automobile platform, and keeping as economical as possible. Ford is expecting to actually have to INCREASE production in the second half of this year by about ten percent in all of this economic turmoil.

So that’s how I am seeing the big three right now, and somehow after a few years ago, Ford has pulled off being the top dog (for now). They seem slightly worried now that the gvt’ owns 60% of GM, that they will no longer want to do business with them.

“We look forward to working with the Obama administration to ensure that the government’s majority ownership of GM will not change the industry’s competitive dynamics and that a level playing field will be maintained.”

The Auto Industry is in a rediculous amount of trouble in North America right now, and the way I see it, in less than 3 years Chrysler is going to be history, the GM ‘upturn’ might finally swing around in 6 years, and Ford will benefit greatly from taking the early damage from their restructuring in 06’ and be the only one left of the big three who can continue to sustainably innovate, build reliable automobiles, and still have a large Reasearch and Development section for greener cars in the future.

I think that the damage has been done to the other not-quite-as-big two, and they’re going to have a very steep hill to climb in order to find their way out of this hole. Especially since Ford is one step ahead.

To wrap up, I believe there is a quote that sums up this whole situation:

“If you find yourself in a hole, stop digging.” - Confucius